Workers See Few Options At Dow Jones

By RICHARD PÉREZ-PEÑA

Published: June 21, 2007

Looking at the potential bidders for Dow Jones & Company -- Rupert Murdoch's News Corporation and a joint effort by General Electric and Pearson -- some reporters and editors at The Wall Street Journal are calling the decision a choice between ''trash or slash.'' And they are wondering which might be worse.

Ever since the News Corporation bid for Dow Jones, The Journal's owner, journalists there have predicted that Mr. Murdoch would dumb down and politicize the news pages. But now that G.E. and Pearson are weighing whether to make a rival offer, Dow Jones employees fear the results would be deep job cuts and a devotion to the bottom line, not great journalism.

Several Journal reporters who had hoped for an alternative bidder now describe it as a case of ''be careful what you wish for.''

Yesterday, negotiations for a sale took a baby step forward as the Bancroft family, owners of a controlling interest in Dow Jones, and the board of Dow Jones agreed that the board should begin direct talks with News Corporation for the first time. That came after the family's approval of a plan to limit News Corporation's control over the content of The Journal and Dow Jones Newswires, after weeks in which the Bancrofts had trouble agreeing on such a proposal.

The Bancrofts had originally said that their representatives on the board would negotiate editorial control directly with News Corporation before turning things over to the Dow Jones board. But board members protested that that would leave them with little leverage to bargain for a higher price, and the Bancrofts ultimately agreed, family members and advisers said yesterday.

Nonfamily board members had also urged the Bancrofts to speed their deliberations, arguing that the possibility of a G.E.-Pearson offer strengthened their bargaining position and that a long delay might prompt Mr. Murdoch to retract his offer.

It is not clear how the Bancrofts' proposal differs from one drafted last week, which would have limited News Corporation's ability to hire and fire the top editors of The Journal and Dow Jones Newswires. Many Journal employees view the effort skeptically, but even some of them say it may be their better alternative.

''If you put a gun to my head, I'd take Murdoch over G.E.-Pearson,'' said a senior editor at The Journal who declined to be identified because the deal is not complete. This editor reasoned that the G.E.-Pearson deal would mean immediate cuts and deteriorating quality, while a Bancroft family deal struck with Mr. Murdoch might hold off fundamental change for a few years.

But a firm offer from Pearson and G.E. still seems far off. Talks between the companies have centered on the creation of a new corporate entity that would include Dow Jones; The Financial Times, which is owned by Pearson; and the CNBC cable channel, which is owned by G.E.

The proposal has been widely described as primarily defensive, to blunt competition from News Corporation, but analysts say it has strategic value on its own -- although perhaps not enough to justify anything like the $5 billion News Corporation has offered.

''I think it's great strategically, with a lot of opportunities for consolidation,'' said Larry Grimes, president of W. B. Grimes & Company, media industry investment bankers. ''Whether they can reach an agreement to make it work and justify a price that would make it happen, that's a very different question.''

Justifying such a price is not the same issue for Mr. Murdoch, a shrewd businessman whose motivations sometimes go beyond profit to include prestige and political influence. He often pours money into the businesses he buys, and he is willing to let some of them, like The New York Post, lose a lot of money, year after year.

In contrast, G.E. and Jeffrey R. Immelt, its chairman and chief executive, have a reputation for wielding the sharpest of pencils, aggressively hunting for savings, taking a hard, unsentimental look at any deal, and walking away if they are not confident it is a serious moneymaker.

Pearson and its chief executive, Marjorie Scardino, are often described as being more willing to pay premium prices for what they buy, though they have not made any major acquisitions recently.

The Journal is the leading finance-oriented newspaper in the United States and The Financial Times holds that distinction in Europe, and uniting them would offer obvious areas for consolidation, like merging or shrinking competing bureaus in many cities.

But analysts say the possible advantages go much further: The Journal could largely retreat from Europe and The Financial Times could do the same in North America, they could consolidate printing operations and offer joint deals to advertisers. Similar arrangements could be made between The Economist, half-owned by Pearson, and Barron's, owned by Dow Jones.

In addition, analysts say that a new corporate parent would be more aggressive than Dow Jones has been about eliminating overlapping jobs at The Journal and Dow Jones Newswires. And some see great advantages in combining the newswires with Interactive Data, a market information service in which Pearson holds a 62 percent stake, creating a more robust competitor to the proposed merger of Thomson and Reuters.

''I think our history shows that we value and nurture the things that make our acquisitions unique, and we don't slash and burn,'' said a G. E. executive who spoke on condition of anonymity because he was not authorized to discuss the matter. ''But obviously, a lot of the strategic value in this would be in consolidation.''

Despite the appeal, there are obstacles, among them the checkered history of corporate media marriages like the Tribune Company with Times Mirror, and Time Warner with AOL.

''You have to be very tough-minded, force people to give up turf, eliminate redundancy, not fantasize synergies that aren't really there, and have someone who's clearly in charge,'' said one media analyst, who was not authorized by his company to talk about the deal. ''But I would expect nothing less from G.E.''

Several people also raised the possibility of antitrust issues. But the biggest stumbling block by far, is price -- News Corporation has offered $60 a share -- and most media bankers and analysts remain doubtful that G.E. and Pearson will ever make an offer.

''The G.E.-Pearson thing could make a lot of sense,'' said John Kornreich, general partner of J. K. Media, a media investment firm. ''But not at a price like that.''

In a surprising development yesterday, a group of investors offered to buy a 30 percent stake in Dow Jones for $60 a share -- the same price News Corporation offered for the whole company -- in return for two seats on the board. In a statement, the group said its offer -- which amounts to a $1.5 billion windfall for its shareholders -- would allow Dow Jones to make capital investments and ''remain independent from other media conglomerates.''

The odd twist is that the group is led by Brad Greenspan, a creator of MySpace, the social networking site, which News Corporation bought in 2005 -- over Mr. Greenspan's objections.